Commercial Lease Checklist for Tenants: What to Check Before You Sign in Sheffield or West Bromwich
A commercial lease checklist for tenants should begin with five questions. Will the tenancy have protection under the Landlord and Tenant Act 1954, or will that protection be excluded? How long are you committed, and can you leave early? What is the total cost, including rent reviews, service charges, insurance and business rates? Who pays for repairs and reinstatement? Finally, will you be asked to provide a personal guarantee? Resolving these points before signing can prevent expensive disagreements and liabilities that continue after you leave.
This guide explains the checks in a practical order. The main leasing rules cover England and Wales, including premises in Sheffield, Dronfield and West Bromwich, although property transaction taxes differ between the two countries.
Start with the heads of terms
Heads of terms outline the proposed deal before solicitors prepare the lease. Mark them subject to contract so that negotiations do not unintentionally create binding obligations, and make any other binding provisions explicit. Resolve key commercial questions now, while rent, incentives, repairs and break options remain negotiable. Changes made after drafting can add cost and delay. Ask who pays for surveys, licences for alterations and any landlord works promised before occupation.
The RICS Code for leasing business premises applies to most business lettings exceeding six months in England and Wales, subject to stated exclusions. RICS members must meet its professional requirements, including recommending independent professional advice where a party is unrepresented. Our commercial lease team can examine the heads of terms before negotiations become advanced.
Check whether the lease is protected
Part II of the Landlord and Tenant Act 1954 generally gives qualifying business tenants security of tenure: they can seek a new tenancy when the contractual term ends, subject to statutory procedures and grounds on which the landlord can oppose renewal. Certain leases are excluded, and others can be validly contracted out. If you agree to contract out, you normally lose that statutory renewal right when the term ends.
A valid exclusion usually requires the landlord to serve the prescribed warning notice and the tenant to make a declaration before the lease, or an agreement for lease, becomes binding. If at least 14 days separate the warning and binding commitment, a simple declaration is sufficient. Otherwise, a statutory declaration before an authorised independent person is required.
Contracting out may suit a temporary shop or business seeking flexibility, but it creates risk when you invest heavily in fit-out or depend on the location. Discuss protection before signing and make sure any renewal promises are documented properly.
The key clauses at a glance
Clause | What to check | Why it matters |
Term and break clause | Length, notice dates and conditions | A missed condition can defeat your break |
Rent and review | Review dates, formula and upwards-only provisions | Determines future occupation costs |
Rent deposit | Amount, deductions and return triggers | Restricts working capital |
Service charge | Recoverable costs, budgets, caps and accounts | May substantially exceed expectations |
Repairs | Full repairing obligations and schedule of condition | Determines repair and exit liabilities |
Alienation | Assignment, subletting and consent terms | Limits your ability to transfer the lease |
Use clause | Permitted business activities and flexibility | Can restrict operating or expanding |
Insurance | Insured risks, reimbursement and excesses | Adds costs and responsibilities |
Forfeiture | Breaches permitting termination and relief rights | Threatens occupation if obligations are broken |
Guarantee | Guarantor, extent and duration | Can expose personal assets |
Our commercial lease advice page explains expressions such as exclusive possession, alienation and demise. Understanding them helps you see exactly what premises and rights the landlord is granting.
Break clauses need careful reading
A break clause allows early termination, but its conditions may require a correctly served notice, payment of specified sums or vacant possession. Courts can enforce express conditions strictly, even where a minor mistake causes considerable financial loss. Record the latest notice date immediately and check the required recipient, service method, payment obligations and any reinstatement wording. Seek advice before relying on the break. Some clauses also require the tenant to hand back keys or remove alterations by a particular date.
Rent review: a major change is coming, but not yet
Rent reviews can change the rent during your term. The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026 and contains provisions restricting upwards-only rent reviews in qualifying new business tenancies. However, the principal restrictions are not yet operational.
Their effect depends on commencement, the wording of the review and transitional protections for existing agreements.
For tenants negotiating today, two points matter:
Existing leases. The new rules do not automatically rewrite rent reviews in leases already granted, although certain later variations or renewals may need separate consideration.
Agreements for lease. Contracts entered into before commencement can attract transitional protection, but particular renewal arrangements have exceptions. Timing and drafting therefore matter.
Ask whether your review can move down as well as up, or whether a fixed stepped rent or negotiated cap offers greater certainty. Our commercial conveyancing team can advise on the lease terms and the legislation's commencement. Agree review assumptions, any rent-free concessions and the process for resolving disputes over valuation before the lease is signed.
Budget for the costs beyond rent
Calculate the total annual cost of occupation, not just the headline rent. Include rent deposits, fitting-out expenses and potential end-of-lease liabilities alongside the following charges.
Service charge. Check the scope, reserve funds, annual budget, reporting and any limit on increases. The current RICS professional standard, effective from December 2025, promotes transparency and fair administration, but your lease determines what may be recovered.
Business rates. Occupiers usually pay these to the council. The 2026 revaluation took effect on 1 April 2026 across England and Wales. England introduced lower multipliers for qualifying retail, hospitality and leisure properties; Welsh multipliers follow different rules. Check the business rates valuation service and your council's relief eligibility.
Stamp Duty Land Tax. For premises in England, GOV.UK explains that new non-residential leases may attract SDLT on a premium and the net present value of rent. The rent portion is 0% up to £150,000, 1% to £5 million and 2% above. Wales instead charges Land Transaction Tax under different thresholds. Our Stamp Duty Land Tax guide covers the English position.
VAT and legal fees. Check whether rent is subject to VAT through an option to tax and whether you must contribute towards the landlord's legal costs.
Repairs and dilapidations
Many commercial leases impose full repairing obligations. These can require a tenant to restore defective premises even where damage existed before occupation, unless the obligation is properly limited. Have a surveyor record defects in a photographic schedule of condition and ensure the lease expressly refers to it. Also check responsibility for the roof, structure, shared services and statutory compliance. Repairs to heating, electrical installations and drainage should also be allocated clearly rather than assumed.
Dilapidations claims can be expensive. For repair breaches, section 18 of the Landlord and Tenant Act 1927 can cap damages by reference to diminution in the landlord's reversionary interest; separate issues arise for reinstatement and other covenants. Keep survey records and seek advice before accepting a landlord's schedule.
Energy performance
Most privately rented commercial buildings must achieve at least EPC E, unless a valid exemption applies. In June 2026 the government outlined proposals for EPC B from 2031 for non-domestic rented buildings over 1,000 square metres, where cost-effective. Smaller buildings would remain subject to the existing E minimum under that proposed approach. These higher standards are not yet binding.
Request the EPC before committing, review exemptions and check who pays for improvements. Search the energy certificate register, and consult the government's landlord guidance for existing requirements.
Use, planning and alterations
The lease's permitted-use clause is separate from planning permission. Check that both allow your intended trade, signage and proposed changes. Sheffield City Council handles planning matters for Sheffield; Sandwell Council covers West Bromwich, while Dronfield sits within North East Derbyshire. Obtain necessary consents for alterations and clarify which fixtures or improvements must be removed at the end of the term.
If you sponsor overseas employees, our employer sponsor licence team can advise on premises evidence and related sponsor compliance requirements.
Personal guarantees and rent deposits
Landlords may request personal guarantees from directors of new or smaller companies. A guarantee can expose the director's finances beyond the company's assets, sometimes continuing after an assignment. Our guide to personal guarantees for directors explains the risks, and our independent legal advice service can assist where needed. A rent deposit ties up funds instead, so negotiate release conditions, deductions and interest.
Check the landlord's title
Your solicitor should verify the landlord's ownership, any superior lease restrictions and whether a lender's consent is needed. Leases granted for more than seven years generally require compulsory registration at HM Land Registry.
Request copies of any superior lease provisions affecting use, alterations, access or signage before completion and occupation. If buying might suit you better, read our guides to financing a commercial purchase and conveyancing for commercial properties. Our conveyancing team can advise on either transaction.
Your pre-signing checklist
Record heads of terms subject to contract and confirm all agreed concessions.
Confirm whether statutory renewal protection is included or excluded.
Note break dates, notice procedures and every condition.
Check rent reviews, payment dates and possible increases.
Calculate rent, service charge, insurance, rates, VAT and transaction taxes.
Obtain a building survey and agreed schedule of condition.
Check the EPC, permitted use, planning status and alterations.
Understand the scope of any guarantee or rent deposit.
Have the landlord's title and required consents investigated.
Inspect the site at different times, including access and parking.
Our guides on due diligence, property fraud and choosing the right solicitor address related precautions.
Frequently asked questions
How long should a commercial lease be?
Choose a term that reflects your business plans and fit-out investment. Short leases offer flexibility; longer leases can support continuity. A workable break clause may balance the two.
What does a contracted-out lease mean?
It means the tenancy excludes security of tenure under the 1954 Act. You generally have no statutory right to a renewal when the contractual term expires.
Can I negotiate a commercial lease?
Yes. Rent-free periods, repairing obligations, rent review provisions, breaks, assignment rights and guarantees may all be negotiated before signing.
Do I need a solicitor for a commercial lease?
Legal advice is strongly recommended because even a short lease can carry substantial obligations for rent, repair and reinstatement.
What is a break clause?
It is a contractual right to end a lease before its normal expiry, subject to notice and any clearly drafted conditions.
Get the lease reviewed before you commit
A commercial lease can create financial obligations lasting for years, so resolve unclear clauses before they become binding. Athi Law advises commercial tenants in Sheffield, Dronfield and West Bromwich. Our commercial team can review your draft lease, explain the legal and financial implications, and negotiate necessary changes. Contact us before signing or paying substantial deposits.
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